ROCK-BOTTOMRATESKEEPHOUSINGHOT

Record-low mortgage rates are bringing first-time home buyers to the table and allowing homeowners opportunities to refinance or move up to a bigger, more expensive home.

Low mortgage interest rates aren't just helping new home buyers or homeowners cashing in on rock-bottom refinancing.

Lenders, Realtors, home builders and their suppliers all are enjoying the situation that has boosted Lawrence-area home building and real estate markets into record territory this year.

``Personally, we're going to double what we did last year,'' said Neal Ezell of Ezell-Morgan Construction Inc. and president of the Lawrence Home Builders Assn.

Through August, the number of residential building permits taken out in Lawrence was up more than 5 percent from a year ago, according to city records. Through July, the value of residential construction in Douglas County was up 19 percent.

Sales of those new homes are at record levels, too, according to the Douglas County appraiser's office. At the current pace, the number of houses sold during 1998 is on track to beat 1997 sales by about 6 percent. In July, the county recorded more sales than ever for that month.

``We'll have another record year,'' said Doug Stephens, president of Stephens Real Estate Inc. He credited record low mortgage interest rates with keeping the market hopping.

``Otherwise, we would have had a slow summer,'' he said. ``Instead, it's been steady all year long.''

Rates at record low

By allowing a lower monthly payment, low mortgage interest rates make housing more affordable to more people. That's leading first-time home buyers to enter the market earlier than they thought they could. It also entices current homeowners to move up to bigger, more expensive homes sooner than they might have.

And rates are at levels never seen before.

``The rates are lower than they got in '93,'' said Chris Forbes of North American Mortgage Co. ``It's causing a lot of people to look at refinancing.''

The previous record low mortgage rate was 6.74 percent, set in late October of 1993, according to the Federal Home Loan Mortgage Corp. or Freddie Mac. Compare that with October 1981, when mortgage rates averaged a record high 18.45 percent.

Last week, rates averaged 6.64 percent nationally on a 30-year fixed rate mortgage, the lowest ever, Freddie Mac said. The figure stayed below 7 percent for the 10th straight week, the longest stretch in almost five years. In Lawrence, they ranged from 6.5 percent to 7 percent, according to a Journal-World survey.

``We're still seeing first-time home buyers,'' Forbes said, ``but October will be the first month this year when we'll have more refinancings than purchases. Up until this month, it's been more buyers than refinancers.''

Dennis Snodgrass of McGrew Real Estate, president of the Lawrence Board of Realtors, said more people were thinking about moving up as falling rates have increased affordability.

A recent national survey found that affordability has become less of an issue than it was two years ago. In 1996, 49 percent of respondents in a national poll said finding a home they liked and could afford was a ``major obstacle'' to home ownership. In this year's poll, that figure had dropped to 26 percent. Lower rates are a key to that change.

Ripple effect

As more people buy more houses, a ripple effect is created.

Home builders have to keep up with the demand. They, in turn, buy supplies to do the work. Lenders make more loans. Real estate brokers hire more agents.

The additional building activity has some builders scrambling to find skilled craftsmen and tradesmen, though, Ezell said. That has forced some builders to take longer to finish their projects or cast a wider net to find employees.

``I've heard a lot of other contractors screaming,'' he said.

But most people are just screaming for joy.

``Real estate companies in Lawrence are enjoying record years,'' Forbes said. ``There's just been a ton of purchases, and a lot of it is due to these great rates. But I think Lawrence drives it on its own, too. Every year we say `this can't keep up,' and it always does.''

-- Richard Brack's phone message number is 832-7194. His e-mail address is rbrack@ljworld.com.